UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

FOR THE MONTH OF JUNE 2020

COMMISSION FILE NUMBER: 333-04906

 

 

SK Telecom Co., Ltd.

(Translation of registrant’s name into English)

 

 

65, Eulji-ro, Jung-gu

Seoul 04539, Korea

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  ☒             Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submission to furnish a report or other document that the registration foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 

 

 

QUARTERLY BUSINESS REPORT

(From January 1, 2020 to March 31, 2020)

THIS IS A SUMMARY OF THE QUARTERLY BUSINESS REPORT ORIGINALLY PREPARED IN KOREAN WHICH IS IN SUCH FORM AS REQUIRED BY THE KOREAN FINANCIAL SERVICES COMMISSION.

IN THE TRANSLATION PROCESS, SOME PARTS OF THE REPORT WERE REFORMATTED, REARRANGED OR SUMMARIZED FOR THE CONVENIENCE OF READERS.

ALL REFERENCES TO THE “COMPANY” SHALL MEAN SK TELECOM CO., LTD. AND, UNLESS THE CONTEXT OTHERWISE REQUIRES, ITS CONSOLIDATED SUBSIDIARIES. REFERENCES TO “SK TELECOM” SHALL MEAN SK TELECOM CO., LTD., BUT SHALL NOT INCLUDE ITS CONSOLIDATED SUBSIDIARIES.

UNLESS EXPRESSLY STATED OTHERWISE, ALL INFORMATION CONTAINED HEREIN IS PRESENTED ON A CONSOLIDATED BASIS IN ACCORDANCE WITH THE INTERNATIONAL FINANCIAL REPORTING STANDARDS ADOPTED FOR USE IN KOREA (“K-IFRS”) WHICH DIFFER IN CERTAIN RESPECTS FROM GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CERTAIN OTHER COUNTRIES, INCLUDING THE UNITED STATES. WE HAVE MADE NO ATTEMPT TO IDENTIFY OR QUANTIFY THE IMPACT OF THESE DIFFERENCES.

I.	COMPANY OVERVIEW

1.    Company Overview

The Company’s quarterly business report for the three months ended March 31, 2020 includes the following consolidated subsidiaries:

 

Name		Date of Establishment		Principal Business		Total Assets as of Dec. 31, 2019 (millions of Won)				Material Subsidiary*
SK Telink Co., Ltd.		Apr. 9, 1998		Telecommunication services and satellite broadcasting services			265,725			Material
SK M&Service Co., Ltd.		Feb. 10, 2000		Online information services			109,699			Material
SK Communications Co., Ltd.		Sept. 19, 1996		Internet portal and other Internet information services			67,327
SK Broadband Co., Ltd.		Sept. 5, 1997		Fixed-line telecommunication services, multimedia and IPTV services			4,447,549			Material
Home & Service Co., Ltd.		June 5, 2017		Information and telecommunication network maintenance			113,176			Material
SK stoa Co., Ltd.		Dec. 1, 2017		Data broadcasting and commercial retail platform services			70,754
K-net Culture and Contents Venture Fund		Nov. 24, 2008		Investment partnership			151,493			Material
PS&Marketing Co., Ltd.		Apr. 3, 2009		Sale of telecommunication devices			439,947			Material
Service Ace Co., Ltd.		Jul. 1, 2010		Customer center management services			80,844			Material
Service Top Co., Ltd.		Jul. 1, 2010		Customer center management services			66,932
SK O&S Co., Ltd. (formerly known as Network O&S Co., Ltd.)		Jul. 1, 2010		Network maintenance services			96,446			Material
SK Planet Co., Ltd.		Oct. 1, 2011		Telecommunication and platform services			595,838			Material
Dreamus Company (formerly known as Iriver Ltd.)		Jul. 12, 2000		Audio device manufacturing			171,586			Material
Iriver Enterprise Ltd.		Jan. 14, 2014		Management of Chinese subsidiary			1,689
Iriver China Co., Ltd.		Jun. 24, 2004		Electronic device manufacturing			2,185
DongGuan Iriver Electronics Co., Ltd.		Jul. 6, 2006		Electronic device manufacturing			—
Life Design Company Inc. (formerly known as S.M. Life Design Company Japan Inc.)		June 25, 2008		Japanese merchandise business			8,681
SK Telecom China Holdings Co., Ltd.		Jul. 12, 2007		Investment (holding company)			47,572
SK Global Healthcare Business Group, Ltd.		Sept. 14, 2012		Investment (SPC)			25,610
SK Planet Japan, K. K.		Mar. 14, 2012		Digital contents sourcing services			56,451
SK Planet Global Holdings Pte. Ltd.		Aug. 10, 2012		Investment (holding company)			415
SKT Americas, Inc.		Dec. 29, 1995		Information collection and management consulting services			30,704
SKP America LLC		Jan. 27, 2012		Digital contents sourcing services			48,344

 

2

Name		Date of Establishment		Principal Business		Total Assets as of Dec. 31, 2019 (millions of Won)				Material Subsidiary*
YTK Investment Ltd.		Jul. 1, 2010		Investment			3,424
Atlas Investment		Jun. 24, 2011		Investment			116,576			Material
SK Telecom Innovation Fund, L.P.		Jan. 15, 2016		Investment			47,879
SK Telecom China Fund I L.P.		Sept. 14, 2011		Investment			19,896
Onestore Co., Ltd.		Mar. 1, 2016		Contents distribution			236,329			Material
SK telecom Japan Inc.		Mar. 1, 2018		Information collection and management consulting services			10,730
id Quantique Ltd.		Oct. 29, 2001		QRNG technology development			38,303
Eleven Street Co., Ltd.		Sept. 1, 2018		E-commerce and Internet-related services			923,424			Material
SK TELINK VIETNAM Co., Ltd.		Aug. 30, 2018		Sale of telecommunication devices			3,084
Quantum Innovation Fund I		Dec. 3, 2018		Investment			8,000
Life & Security Holdings Co., Ltd.		Mar. 21, 2014		Holding company			2,639,781			Material
ADT CAPS Co., Ltd.		Jan. 22, 1971		Unmanned security services			706,808			Material
CAPSTEC Co., Ltd.		Jan. 1, 2005		Manned security services			29,569
SK Infosec Co., Ltd.		Jun. 26, 2000		Information security services			158,424			Material
Id Quantique LLC		Jul. 27, 2018		Quantum information and communications services			1,177
FSK L&S Co., Ltd.		Oct. 20, 2016		Logistics consulting services			47,550
FSK L&S (Shanghai) Co., Ltd.		Jul. 29, 2010		International cargo transportation agent			23,454
FSK L&S (Hungary) Co., Ltd.		Sept. 13, 2019		International cargo transportation agent			532
SK Telecom TMT Investment Corp.		Jan. 4, 2019		Investment			33,482
Incross Co., Ltd.		Aug. 13, 2007		Advertising agency services			144,263			Material
Infra Communications Co., Ltd.		Aug. 1, 2017		Operation of mobile services			1,569
Happy Hanool Co., Ltd.		Aug. 8, 2019		Services			800
SKinfosec Information Technology (wuxi) Co., Ltd.		Aug. 21, 2019		System software development and supply services			453
Mindknock Co., Ltd.		Jan. 31, 2018		Software development services			458

 

*	Material Subsidiary means a subsidiary with total assets of Won 75 billion or more as of the end of the latest fiscal year.

Changes in subsidiaries during the three months ended March 31, 2020 are set forth below.

 

Change		Name		Remarks
Exclusions		ADT SECURITY Co., Ltd.		Merged into ADT CAPS Co., Ltd.

 

3

A.	Corporate Legal Business Name: SK Telecom Co., Ltd.

 

B.	Date of Incorporation: March 29, 1984

 

C.	Location of Headquarters

 

(1)

Address: 65 Euljiro, Jung-gu, Seoul, Korea

 

(2)

Phone: +82-2-6100-2114

 

(3)

Website: http://www.sktelecom.com

 

D.	Major Businesses

 

(1)

Wireless business

The Company provides wireless telecommunications services, characterized by its competitive strengths in handheld devices, affordable pricing, network coverage and an extensive contents library. The Company continues to maintain its reputation as the unparalleled premium network operator in the 2G, 3G, 4G and 5G markets on the basis of its technological leadership and network management technology. With the world’s first commercialization of 5G technology in 2019, the Company continues to maintain its position as the top network operator in the 5G era and strives to provide differentiated services to its customers. In particular, in order to expedite its customers’ realization of the benefits of 5G services, the Company is pursuing efficient coverage expansion through the establishment of “5G Clusters” focused on services, key commercial districts and business-to-business (“B2B”).

In order to strengthen its sales channels, the Company has been offering a variety of fixed-line and wireless telecommunication convergence products through its subsidiary, PS&Marketing Co., Ltd. (“PS&Marketing”). PS&Marketing provides differentiated service to customers through the establishment of new sales channels and product development. Through its subsidiaries Service Ace Co., Ltd. and Service Top Co., Ltd., the Company operates customer service centers in Seoul and provides telemarketing services. Additionally, SK O&S Co., Ltd. (“SK O&S”), the Company’s subsidiary responsible for the operation of the Company’s networks, including its 5G network, provides customers with quality network services and provides the Company with technological know-how in network operations.

The Company plans to increase its profitability by strengthening its retention policy, which is the fundamental basis of competitiveness for telecommunication companies in this data-intensive era. The Company will lead the information and communication technology (“ICT”) trend by providing products through which customers can have a distinctive experience and by providing innovative services to transition to service-based competition.

The Company plans to further utilize its big data analysis capabilities to seek momentum for growth in new business areas.

 

(2)

Fixed-line business

SK Broadband Co., Ltd. (“SK Broadband”) is engaged in providing telecommunications, broadcasting and new media services and various other services that are permitted to be carried out by SK Broadband under relevant regulations, as well as business activities that are directly or indirectly related to providing those services. In 1999, SK Broadband launched its high-speed Internet service in Seoul, Busan, Incheon and Ulsan and currently provides such services nationwide. SK Broadband also commercialized its TV-Portal service in July 2006 and its IPTV service in January 2009 upon receipt of permit in September 2008. In April 2019, SK Broadband decided to launch an integrated over-the-top (“OTT”) platform “wavve,” combining its OTT service “oksusu” with POOQ, an OTT service alliance of Korea’s three terrestrial broadcasters. SK Broadband is focusing on strengthening the competitiveness of the combined OTT service through an increased investment in content and thereby developing it into a key service in the 5G era. In addition, SK Broadband’s merger with Tbroad Co., Ltd. (“Tbroad”) obtained all requisite regulatory approvals in January 2020, and the merger became effective as of April 30, 2020.

 

4

(3)

Security business

In the field of security business, the Company has completed its converged security business portfolio ranging from physical security to information security through the acquisitions of new material subsidiaries ADT CAPS Co., Ltd. (“ADT CAPS”) and SK Infosec Co., Ltd. (“SK Infosec”). Due to a growing number of single-person households and increasing awareness for crime prevention, the security industry has been growing steadily in recent years. New markets for physical security have also been developing as a result of integrating cutting-edge ICT, such as big data, Internet of Things (“IoT”) and AI, and bio-recognition technologies. The domestic market size of the physical security industry expanded from Won 3.6 trillion in 2012 to Won 5.5 trillion in 2017 (at an average annual growth rate of 8.7%), and is expected to grow to Won 7.9 trillion (at an average annual growth rate of 7.5%) in 2022. The Company plans to expand its security business into one of its major business areas by leveraging such industry growth and synergies with its other ICT-based businesses.

 

(4)

Commerce business

The Company is a leading player in the Korean e-commerce industry through its material subsidiary Eleven Street Co., Ltd. (“Eleven Street”), which operates an e-commerce platform service that connects various sellers and purchasers through its online and mobile platforms. In addition, the Company continues to evolve into a commerce portal by providing differentiated shopping-related services covering shopping information, product search and purchases, relying on the strength of the Company’s core principles of innovation supported by its advanced technological capabilities, including artificial intelligence (“AI”)-based commerce search technology and customized recommendations based on big data analysis.

See “II.1. Business Overview” for more information.

 

5

E.	Credit Ratings

 

(1)

Corporate bonds and other long-term securities

 

Credit rating date		Subject of rating		Credit rating		Credit rating entity (Credit rating range)		Rating classification
April 12, 2017		Corporate bond		AAA (Stable)		Korea Ratings		Regular rating
April 12, 2017		Corporate bond		AAA (Stable)		Korea Investors Service, Inc.		Regular rating
April 12, 2017		Corporate bond		AAA (Stable)		NICE Investors Service, Co., Ltd.		Regular rating
April 12, 2017		Corporate bond		AAA (Stable)		Korea Ratings		Current rating
April 12, 2017		Corporate bond		AAA (Stable)		Korea Investors Service, Inc.		Current rating
April 12, 2017		Corporate bond		AAA (Stable)		NICE Investors Service, Co., Ltd.		Current rating
October 30, 2017		Corporate bond		AAA (Stable)		Korea Ratings		Current rating
October 30, 2017		Corporate bond		AAA (Stable)		Korea Investors Service, Inc.		Current rating
October 30, 2017		Corporate bond		AAA (Stable)		NICE Investors Service, Co., Ltd.		Current rating
February 5, 2018		Corporate bond		AAA (Stable)		Korea Ratings		Current rating
February 5, 2018		Corporate bond		AAA (Stable)		NICE Investors Service, Co., Ltd.		Current rating
February 6, 2018		Corporate bond		AAA (Stable)		Korea Investors Service, Inc.		Current rating
April 10, 2018		Corporate bond		AAA (Stable)		Korea Investors Service, Inc.		Regular rating
April 11, 2018		Corporate bond		AAA (Stable)		Korea Ratings		Regular rating
April 16, 2018		Corporate bond		AAA (Stable)		NICE Investors Service, Co., Ltd.		Regular rating
May 29, 2018		Hybrid securities		AA+ (Stable)		Korea Ratings		Current rating
August 31, 2018		Corporate bond		AAA (Stable)		Korea Ratings		Current rating
August 31, 2018		Corporate bond		AAA (Stable)		Korea Investors Service, Inc.		Current rating
August 31, 2018		Corporate bond		AAA (Stable)		NICE Investors Service, Co., Ltd.		Current rating
February 20, 2019		Corporate bond		AAA (Stable)		Korea Ratings		Current rating
February 20, 2019		Corporate bond		AAA (Stable)		Korea Investors Service, Inc.		Current rating
February 20, 2019		Corporate bond		AAA (Stable)		NICE Investors Service, Co., Ltd.		Current rating
May 31, 2019		Corporate bond		AAA (Stable)		Korea Ratings		Regular rating
June 4, 2019		Corporate bond		AAA (Stable)		NICE Investors Service, Co., Ltd.		Regular rating
June 18, 2019		Corporate bond		AAA (Stable)		Korea Investors Service, Inc.		Regular rating
July 15, 2019		Corporate bond		AAA (Stable)		Korea Ratings		Current rating
July 15, 2019		Corporate bond		AAA (Stable)		Korea Investors Service, Inc.		Current rating
July 15, 2019		Corporate bond		AAA (Stable)		NICE Investors Service, Co., Ltd.		Current rating
October 4, 2019		Corporate bond		AAA (Stable)		Korea Ratings		Current rating
October 7, 2019		Corporate bond		AAA (Stable)		Korea Investors Service, Inc.		Current rating
October 8, 2019		Corporate bond		AAA (Stable)		NICE Investors Service, Co., Ltd.		Current rating
December 26, 2019		Corporate bond		AAA (Stable)		Korea Ratings		Current rating
December 27, 2019		Corporate bond		AAA (Stable)		Korea Investors Service, Inc.		Current rating
December 27, 2019		Corporate bond		AAA (Stable)		NICE Investors Service, Co., Ltd.		Current rating

 

*	Rating definition: “AAA” - The certainty of principal and interest payment is at the highest level with extremely low investment risk and is stable such that it will not be influenced by reasonably foreseeable changes in external factors.

*	Rating definition: “AA” - The certainty of principal and interest payment is extremely high with very low investment risk, but has slightly inferior factors compared to “AAA” rating.

 

(2)

Commercial paper (“CP”) and short-term bonds

 

Credit rating date		Subject of rating		Credit rating		Credit rating entity (Credit rating range)		Rating classification
April 12, 2017		CP		A1		Korea Ratings		Current rating
April 12, 2017		CP		A1		Korea Investors Service, Inc.		Current rating
April 12, 2017		CP		A1		NICE Investors Service Co., Ltd.		Current rating

 

6

Credit rating date		Subject of rating		Credit rating		Credit rating entity (Credit rating range)		Rating classification
April 12, 2017		Short-term bond		A1		Korea Ratings		Current rating
April 12, 2017		Short-term bond		A1		Korea Investors Service, Inc.		Current rating
April 12, 2017		Short-term bond		A1		NICE Investors Service Co., Ltd.		Current rating
October 30, 2017		CP		A1		Korea Ratings		Regular rating
October 30, 2017		CP		A1		Korea Investors Service, Inc.		Regular rating
October 30, 2017		CP		A1		NICE Investors Service Co., Ltd.		Regular rating
October 30, 2017		Short-term bond		A1		Korea Ratings		Regular rating
October 30, 2017		Short-term bond		A1		Korea Investors Service, Inc.		Regular rating
October 30, 2017		Short-term bond		A1		NICE Investors Service Co., Ltd.		Regular rating
April 10, 2018		CP		A1		Korea Investors Service, Inc.		Current rating
April 10, 2018		Short-term bond		A1		Korea Investors Service, Inc.		Current rating
April 11, 2018		CP		A1		Korea Ratings		Current rating
April 11, 2018		Short-term bond		A1		Korea Ratings		Current rating
April 16, 2018		CP		A1		NICE Investors Service Co., Ltd.		Current rating
April 16, 2018		Short-term bond		A1		NICE Investors Service Co., Ltd.		Current rating
August 31, 2018		CP		A1		Korea Ratings		Regular rating
August 31, 2018		CP		A1		Korea Investors Service, Inc.		Regular rating
August 31, 2018		CP		A1		NICE Investors Service Co., Ltd.		Regular rating
August 31, 2018		Short-term bond		A1		Korea Ratings		Regular rating
August 31, 2018		Short-term bond		A1		Korea Investors Service, Inc.		Regular rating
August 31, 2018		Short-term bond		A1		NICE Investors Service Co., Ltd.		Regular rating
May 31, 2019		CP		A1		Korea Ratings		Current rating
May 31, 2019		Short-term bond		A1		Korea Ratings		Current rating
June 4, 2019		CP		A1		NICE Investors Service Co., Ltd.		Current rating
June 4, 2019		Short-term bond		A1		NICE Investors Service Co., Ltd.		Current rating
June 18, 2019		CP		A1		Korea Investors Service, Inc.		Current rating
June 18, 2019		Short-term bond		A1		Korea Investors Service, Inc.		Current rating
October 4, 2019		CP		A1		Korea Ratings		Regular rating
October 4, 2019		Short-term bond		A1		Korea Ratings		Regular rating
October 7, 2019		CP		A1		Korea Investors Service, Inc.		Regular rating
October 7, 2019		Short-term bond		A1		Korea Investors Service, Inc.		Regular rating
October 8, 2019		CP		A1		NICE Investors Service Co., Ltd.		Regular rating
October 8, 2019		Short-term bond		A1		NICE Investors Service Co., Ltd.		Regular rating

 

*	Rating definition: “A1” - Timely repayment capability is at the highest level with extremely low investment risk and is stable such that it will not be influenced by reasonably foreseeable changes in external factors.

 

7

(3)

International credit ratings

 

Date of credit rating		Subject of rating		Credit rating of securities		Credit rating agency		Rating type
October 23, 2017		Bonds denominated in foreign currency		A- (Stable)		Fitch Ratings		Regular rating
April 8, 2018		Bonds denominated in foreign currency		A- (Stable)		S&P Global Ratings		Current rating
April 9, 2018		Bonds denominated in foreign currency		A3 (Stable)		Moody’s Investors Service		Current rating
May 8, 2018		Bonds denominated in foreign currency		A- (Stable)		S&P Global Ratings		Regular rating
May 10, 2018		Bonds denominated in foreign currency		A3 (Negative)		Moody’s Investors Service		Regular rating
October 15, 2018		Bonds denominated in foreign currency		A- (Negative)		Fitch Ratings		Regular rating
March 6, 2019		Bonds denominated in foreign currency		A- (Negative)		S&P Global Ratings		Regular rating
May 30, 2019		Bonds denominated in foreign currency		A3 (Negative)		Moody’s Investors Service		Regular rating
October 14, 2019		Bonds denominated in foreign currency		A- (Negative)		Fitch Ratings		Regular rating

 

(4)

Listing (registration or designation) of Company’s shares and special listing status

 

Listing (registration or designation) of stock		Date of listing (registration or designation)		Special listing		Special listing and applicable regulations
KOSPI Market of Korea Exchange		November 7, 1989		Not applicable		Not applicable

2.    Company History

March 1984: Establishment of Korea Mobile Telecommunications Co., Ltd.

November 1989: Listing on the KOSPI Market of the Korea Exchange

March 1997: Change of name to SK Telecom Co., Ltd.

March 2008: Acquisition of Hanaro Telecom (the predecessor entity of SK Broadband)

October 2011: Spin-off of SK Planet Co., Ltd. (“SK Planet”)

June 2015: Comprehensive exchange of shares of SK Broadband

April 2016: Spin-off and merger of the location-based services business and the mobile phone verification services business of SK Planet

December 2017: Comprehensive exchange of shares of SK Telink Co., Ltd. (“SK Telink”)

December 2018: Comprehensive exchange of shares of SK Infosec

 

A.	Location of Headquarters

 

•

22 Dohwa-dong, Mapo-gu, Seoul (July 11, 1988)

 

•

16-49 Hangang-ro 3-ga, Yongsan-gu, Seoul (November 19, 1991)

 

•

267 Namdaemun-ro 5-ga, Jung-gu, Seoul (June 14, 1995)

 

•

99 Seorin-dong, Jongro-gu, Seoul (December 20, 1999)

 

•

65 Euljiro, Jung-gu, Seoul (December 13, 2004)

 

8

B.	Significant Changes in Management

At the 31st General Meeting of Shareholders held on March 20, 2015, Dong Hyun Jang was elected as an inside director. At the 32nd General Meeting of Shareholders held on March 18, 2016, Dae Sik Cho was re-elected as an inside director and Dae Shick Oh was re-elected as an independent director and member of the audit committee of the Company’s board of directors (the “Board of Directors”). At the 33rd General Meeting of Shareholders held on March 24, 2017, Jung Ho Park was elected as an inside director and Dae Sik Cho was elected as a non-executive director. Jae Hoon Lee and Jae Hyeon Ahn were re-elected as independent directors and members of the audit committee and Jung Ho Ahn was elected as an independent director. At the 34th General Meeting of Shareholders held on March 21, 2018, Young Sang Ryu was elected as an inside director and Youngmin Yoon was elected as an independent director and member of the audit committee of the Board of Directors. At the 35th General Meeting of Shareholders held on March 26, 2019, Seok-Dong Kim was elected as an independent director and member of the audit committee of the Board of Directors. At the 36th General Meeting of Shareholders held on March 26, 2020, Jung Ho Park was re-elected as an inside director, Dae Sik Cho was re-elected as a non-executive director, Jung Ho Ahn was re-elected as an independent director and member of the audit committee of the Board of Directors, Yong-Hak Kim was newly elected as an independent director and member of the audit committee and Junmo Kim was newly elected as an independent director.

 

C.	Change in Company Name

On January 2, 2017, SK M&Service Co., Ltd. (“SK M&Service”), one of the Company’s subsidiaries, changed its name to SK M&Service Co., Ltd. from M&Service Co., Ltd. in accordance with a resolution at its general meeting of shareholders on December 26, 2016.

On October 23, 2018, Life & Security Holdings Co., Ltd. (“Life & Security Holdings”), one of the Company’s subsidiaries, changed its name to Life & Security Holdings Co., Ltd., from Siren Holdings Korea Co., Ltd., in accordance with a resolution at its extraordinary meeting of shareholders.

On March 28, 2019, Iriver Ltd., one of the Company’s subsidiaries, changed its name to Dreamus Company in accordance with a resolution at its general meeting of shareholders.

On April 17, 2019, Network O&S Co., Ltd., one of the Company’s subsidiaries, changed its name to SK O&S Co., Ltd. pursuant to a resolution at its extraordinary meeting of shareholders.

 

D.	Mergers, Acquisitions and Restructuring

 

(1)

Disposition of a portion of KEB Hana Card shares

On April 3, 2015, the Company sold 27,725,264 shares (10.4% out of the 25.4% equity interest the Company held prior to the sale) of KEB Hana Card Co., Ltd. to Hana Financial Group in cash. With the proceeds of such sale (Won 180 billion), the Company acquired equity interests in Hana Financial Group on April 17, 2015 through participation in a rights offering by Hana Financial Group. The Company plans to maintain its strategic alliance and pursue opportunities to create synergies with, Hana Financial Group.

 

(2)

Comprehensive share exchange of SK Broadband

On March 20, 2015, the Board of Directors resolved to approve a share exchange transaction through which the Company acquired all of the shares of SK Broadband that it did not otherwise own in exchange for its treasury shares such that SK Broadband became a wholly-owned subsidiary of the Company.

 

•

Share exchange ratio: Shareholders of one common share of SK Broadband were allotted 0.0168936 common shares of SK Telecom

 

•

Shares exchanged: 2,471,883 registered common shares of SK Telecom

 

•

Date of share exchange agreement: March 23, 2015

 

•

Record date: April 6, 2015

 

•

Announcement date for the proceeding of the share exchange as a small-scale share swap: April 6, 2015

 

9

•

Meeting of the Board of Directors for approval of the share exchange: May 6, 2015

 

•

Date of the share exchange: June 9, 2015

(3) Establishment of Entrix Co., Ltd. (“Entrix”)

In July 2015, SK Planet spun off its cloud streaming division and established Entrix. The Company exchanged 1,300,000 shares of SK Planet for 1,300,000 shares of Entrix at the time of the spin-off and later acquired an additional 2,857,000 shares by participating in the recapitalization.

(4) Additional capital raise by NanoEnTek Inc.

In 2015, the Company acquired 1,090,155 shares through the additional capital raise by NanoEnTek Inc.

(5) Reclassification of Packet One Networks’ accounts

In 2015, the Company reclassified its investments in Packet One from investments in associates and joint ventures to assets classified as held for sale as the Company no longer had significant control over Packet One. The difference between the book value and the fair value of Won 37.4 billion at the time of reclassification was recognized as impairment loss.

(6) Acquisition of shares of SK Communications Co., Ltd. (“SK Communications”)

On October 1, 2015, the Company became the largest shareholder of SK Communications with a 64.54% equity interest through dividends in kind from SK Planet of 26,523,815 shares and the purchase of 1,506,130 shares over-the-counter.

(7) Acquisition of shares of CJ HelloVision Co., Ltd. (“CJ HelloVision”)

On November 2, 2015, the Board of Directors resolved to approve the acquisition of CJ HelloVision’s shares from CJ O Shopping Co., Ltd. (“CJ O Shopping”) and on the same day, entered into a share purchase agreement with CJ O Shopping. In addition, on November 2, 2015, SK Broadband’s board of directors resolved to approve the merger of SK Broadband with CJ HelloVision and on the same day, entered into a merger agreement with CJ HelloVision and the closing of the merger was conditioned upon receipt of regulatory approval from relevant authorities. On July 25, 2016, the Company notified CJ O Shopping of the termination of the share purchase agreement and SK Broadband notified CJ HelloVision of the termination of the merger agreement, as the Korea Fair Trade Commission on July 18, 2016 denied approval of the proposed merger, which was a closing condition to the consummation of the merger.

(8) Tender offer of shares of CJ HelloVision

From November 2, 2015 to November 23, 2015, the Company purchased 6,671,933 shares of CJ HelloVision in a tender offer for up to 10,000,000 shares, paying Won 12,000 per share. Through this tender offer, the Company acquired an 8.61% equity interest in CJ HelloVision.

(9) Establishment of SK TechX Co., Ltd. and Onestore

In March 2016, SK Planet spun off its platform business and T Store business and established SK TechX Co., Ltd. (“SK TechX”) and Onestore. The Company exchanged 12,323,905 shares of SK Planet for 6,323,905 shares of SK TechX and 6,000,000 shares of Onestore at the time of the spin-off. The Company later acquired an additional 4,409,600 shares of Onestore at a purchase price of Won 22 billion by participating in the follow-on rights offering. The Company did not participate in the subsequent follow-on rights offering and as of March 31, 2020, the Company had a 52.7% interest in Onestore.

 

10

(10) Spin-off and merger of SK Planet’s location-based services business and mobile phone verification services business

Through the merger of SK Planet’s location-based services business and mobile phone verification services business into SK Telecom, the Company seeks to provide a solid base for continued growth, especially in the next generation platform business, and SK Planet plans to further concentrate its resources on its commerce business. The spin-off and merger was effective as of April 5, 2016 and was registered as of April 7, 2016. SK Planet is a wholly-owned subsidiary of the Company, and as the Company did not issue any new shares in connection with the merger, there was no change in the share ownership of the Company.

(11) Establishment of Hana-SK Fintech Corporation

In order to provide an everyday finance platform, the Company entered into a joint venture agreement with Hana Financial Group, in accordance with the resolution of the Board of Directors on July 28, 2016. Combining the Company’s leading mobile technology and big data analysis capabilities with Hana Financial Group’s financial service, Hana-SK Fintech Corporation plans to provide innovative mobile financial services such as mobile asset management, easy payment and overseas wire transfer services. SK Telecom holds a 49% equity stake in the joint venture, and Hana Financial Group holds the remaining 51%. Service of the everyday finance platform Finnq officially launched in the third quarter of 2017.

(12) Capital contribution of shares of NSOK Co., Ltd. (“NSOK”) for new shares of SK Telink

On October 25, 2016, the Company made a capital contribution of all shares of NSOK owned by the Company to SK Telink in exchange for 219,967 newly issued shares of SK Telink, which resulted in an increase of the Company’s equity interest in SK Telink to 85.86%.

(13) Acquisition of shares of SM Mobile Communications

In October 2016, the Company transferred the media platform businesses Hotzil and 5Ducks to SM Mobile Communications in exchange for 1,200,000 shares of SM Mobile Communications. As a result, the Company owned a 46.2% equity interest in SM Mobile Communications as of March 31, 2020.

(14) Exchange of shares of SK Communications

On November 24, 2016, the Board of Directors resolved to approve the payment of cash consideration in lieu of the issuance of shares of the Company in a comprehensive exchange of shares of SK Communications. The amount of cash consideration was based on a share exchange ratio of one common share of the Company to 0.0125970 common share of SK Communications. In February 2017, SK Communications became a wholly-owned subsidiary of the Company.

(15) Acquisition of shares of Iriver

The Company acquired 4,699,248 shares of Iriver at a purchase price of Won 5,320 in connection with a capital contribution. The Company’s equity interest in Iriver following the acquisition is 45.9%. See “Report on Important Business Matters (Decision on Capital Increase)” filed on July 17, 2017 by Iriver for more information.

(16) Acquisition of newly issued shares of SK China Company Limited (“SK China”)

On July 28, 2017, the Company acquired newly issued shares of SK China to find investment opportunities in ICT and other promising areas of growth in China. In exchange for newly issued shares of SK China, the Company contributed its full equity interest in each of SKY Property Management Limited (“SKY”) and SK Industrial Development China Co., Ltd. (“SK IDC”) as well as cash, equal to the following amounts: 1) SKY stock: USD 276,443,440.64, 2) SK IDC stock: USD 108,072,007.67 and 3) Cash: USD 100,000,000.00. As a result of the acquisition, the Company holds 10,928,921 shares and a 27.27% of equity interest in SK China. See “Report on Decision on Acquisition of SK China Shares” filed by the Company on July 28, 2017 for more information about this transaction.

(17) Exchange of shares of SK Telink

On September 28, 2017, the Company disclosed a resolution approving the payment of cash consideration in lieu of the issuance of shares of SK Telecom in an exchange of shares of SK Telink. The amount of cash consideration was based on a share exchange ratio of 1:1.0687714. The exchange was completed on December 14, 2017, upon which exchange SK Telink became a wholly-owned subsidiary of the Company.

 

11

(18) Acquisition of shares of FSK L&S Co., Ltd.

On February 6, 2016, the Company acquired 2,415,750 shares of FSK L&S Co., Ltd. at a purchase price of Won 17.8 billion from SK Holdings Co., Ltd. (“SK Holdings”) to utilize its logistics sharing infrastructure with its counterparties and pursue new business opportunities. As a result of the acquisition, the Company had a 60% equity interest in FSK L&S Co., Ltd.

(19) Acquisition of shares of id Quantique SA

In order to increase the value of the Company by enhancing its position as the top mobile network operator (“MNO”) through utilizing quantum cryptography and by generating returns from its global business, the Company acquired an additional 41,157,506 shares of id Quantique SA on April 30, 2018. As a result, the Company owns a total of 58.1% of the issued and outstanding shares (44,157,506 shares), and has acquired control, of id Quantique SA.

(20) Acquisition of shares of Siren Holdings Korea Co., Ltd.

The Company acquired shares of Siren Holdings Korea Co., Ltd. (“SHK”), which wholly owns ADT CAPS, in order to strengthen its security business and expand its residential customer base. See “Report on Decision on Acquisition of Shares of Siren Holdings Korea Co., Ltd.” filed on May 8, 2018 for more information.

 

*	Siren Investments Korea Co., Ltd. merged with and into SHK with SHK as the surviving entity, following which CAPSTEC Co., Ltd. (“CAPSTEC”) and ADT SECURITY Co., Ltd. (“ADT SECURITY”), which were subsidiaries of ADT CAPS, became subsidiaries of SHK.

 

*	SHK changed its name to Life & Security Holdings Co., Ltd. in accordance with a resolution at its extraordinary meeting of shareholders on October 23, 2018.

(21) Capital increase of Iriver

On July 26, 2018, the board of directors of Iriver, a subsidiary of the Company, resolved to approve a capital increase of Won 70,000 million through third-party allotment and subsequently issued 7,990,867 common shares. The Company participated in the capital increase and paid Won 65,000 million to subscribe 7,420,091 common shares of Iriver on August 10, 2018, resulting in an increase of the Company’s ownership interest from 45.9% to 53.7%.

(22) Exchange of shares of SK Infosec

On October 26, 2018, the Company announced the decision of the Board of Directors to approve the comprehensive exchange of shares of SK Infosec for shares of the Company. The share exchange ratio was one common share of the Company to 0.0997678 common share of SK Infosec. The share exchange was completed on December 27, 2018, upon which SK Infosec became a wholly-owned subsidiary of the Company.

(23) Acquisition of shares of SK stoa Co., Ltd. (“SK Stoa”)

On April 25, 2019, the Board of Directors resolved to acquire the 100% equity interest in SK Stoa owned by SK Broadband, a subsidiary of the Company, in order to expand its T-commerce business and maximize synergies with other ICT businesses of the Company. On January 3, 2020, the Company acquired 3,631,355 shares of SK Stoa after obtaining governmental approvals.

(24) Acquisition of shares of Tbroad Nowon Broadcasting Co., Ltd. (“Tbroad Nowon”)

On April 26, 2019, the Board of Directors resolved to acquire shares of Tbroad Nowon to enhance the Company’s competitiveness in the media business pursuant to a share purchase agreement with Tbroad Nowon’s largest shareholder, Tbroad. The Company acquired a 55.00% equity interest, or 627,000 shares, of Tbroad Nowon at a purchase price of Won 10.4 billion. See the report on “Amendment Regarding Decision on Acquisition of Tbroad Nowon” filed by the Company on January 28, 2020 for more information.

 

12

(25) Disposal of shares of SMC and Shopkick

On June 11, 2019, SKP America, a subsidiary of the Company, disposed of its 100% equity interest in SMC and SMC’s wholly-owned subsidiary Shopkick.

(26) Acquisition of shares of Incross Co., Ltd. (“Incross”)

On June 28, 2019, the Company acquired 2,786,455 shares of Incross in order to strengthen its digital advertising business. The Company’s equity interest in Incross following the acquisition is 34.6%. See the report on “Decision on Acquisition of Shares of Incross” filed by the Company on April 11, 2019, as amended on June 3, 2019 for more information.

(27) Capital increase of Content Alliance Platform Inc. (“Content Alliance Platform”)

The Company participated in a capital increase by Content Alliance Platform in the amount of Won 90 billion through third-party allotment in order to provide innovative media services and contents to customers and to enhance its competitiveness as a differentiated mobile OTT platform. See the report on “Participation in Capital Increase by Content Alliance Platform” filed by the Company on April 5, 2019, as amended on June 28, 2019.

(28) Acquisition of newly-issued shares of Kakao Corp. (“Kakao”)

In order to pursue a strategic alliance with Kakao, the Company acquired newly-issued common shares of Kakao in the aggregate amount of approximately Won 300 billion through third-party allotment. Kakao acquired treasury shares of the Company. See the report on “Results of Disposal of Treasury Shares” filed by the Company on November 5, 2019 for more information.

[SK Broadband]

(1) Establishment of a subsidiary

On May 23, 2017, SK Broadband’s board of directors resolved to approve the establishment of a subsidiary. On June 5, 2017, SK Broadband established Home & Service Co., Ltd. (“Home & Service”), a subsidiary responsible for the management of customer service operations. Home & Service was incorporated by SK Broadband under the Korean Commercial Code. The subsidiary was capitalized at Won 46 billion and the Korea Fair Trade Commission approved the subsidiary’s incorporation as an SK affiliate on July 1, 2017.

(2) Spin-off

On August 16, 2017, SK Broadband’s board of directors resolved to approve the spin-off of its T-commerce subsidiary through a spin-off and subsequent establishment of a subsidiary pursuant to Article 530-2 and 530-12 of the Korean Commercial Code, with both companies from the simple vertical spin-off remaining as existing companies. The spin-off was effective as of December 1, 2017, and the subsidiary was capitalized at Won 15 billion, with SK Broadband holding a 100% equity interest. The Korea Fair Trade Commission approved the subsidiary’s incorporation as an SK affiliate on January 1, 2018.

 

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(3) Transfer of business

On April 5, 2019, SK Broadband’s board of directors resolved to approve an agreement for the transfer of its OTT service, oksusu, to Content Alliance Platform (POOQ), a joint venture among KBS, MBC and SBS. The transaction was completed on September 18, 2019.

(4) Transfer of subsidiary shares

On April 24, 2019, SK Broadband’s board of directors approved the transfer of its 100% equity interest (3,631,355 shares) in SK Stoa, a subsidiary of SK Broadband, to SK Telecom. On December 30, 2019, the Ministry of Science and ICT (“MSIT”) approved the change in the largest capital contributor, and the transaction was completed on January 3, 2020.

(5) Merger of Tbroad, Tbroad Dongdaemun Broadcasting Co., Ltd. (“Tbroad Dongdaemun”) and Korea Digital Cable Media Center (“KDMC”) with and into SK Broadband

On April 26, 2019, SK Broadband’s board of directors resolved to enter into a merger agreement pursuant to which Tbroad, Tbroad Dongdaemun and KDMC will merge with and into SK Broadband. On January 23, 2020, the parties entered into an amendment to the merger agreement due to changes in the merger timeline, and on March 26, 2020, the entry into the merger agreement was approved as proposed at the extraordinary general meeting of shareholders. The merger was completed as of April 30, 2020.

[SK Telink]

(1) Acquisition of shares of NSOK

In accordance with the resolution of its board of directors on September 22, 2016, SK Telink received a capital contribution of 408,435 shares (an 83.9% equity interest) of NSOK owned by SK Telecom. On October 25, 2016, SK Telink acquired the remaining 78,200 outstanding shares (a 16.1% equity interest) of NSOK, pursuant to which NSOK became a wholly-owned subsidiary of SK Telink.

In accordance with the resolution of its board of directors on April 12, 2017, SK Telink acquired 525,824 additional shares of NSOK pursuant to a rights offering for an aggregate amount of Won 40.0 billion (or Won 76,071 per share), resulting in SK Telink’s ownership of 1,012,459 shares (a 100% equity interest) of NSOK.

(2) Comprehensive exchange of shares

On September 28, 2017, SK Telink’s board of directors approved a comprehensive exchange of shares with SK Telecom, pursuant to which SK Telecom would acquire SK Telink’s remaining outstanding shares for cash consideration in lieu of issuance of shares of SK Telecom. The share exchange agreement was subsequently approved at the extraordinary general meeting of shareholders held on November 9, 2017.

Following the exchange, there were no changes to SK Telecom’s share ownership interest level or to management structure, and SK Telecom and SK Telink will remain as corporate entities. SK Telink became a wholly-owned subsidiary of SK Telecom and remains as an unlisted corporation, while SK Telecom remains as a listed corporation.

(3) Disposal of NSOK shares

Pursuant to the resolution of its board of directors on October 8, 2018, SK Telink entered into an agreement to sell 1,012,459 shares of NSOK (representing a 100.00% equity interest) to Life & Security Holdings. The date of sale was October 10, 2018, and the sale consideration amount was Won 100 billion. See “Report on Disposal of Shares of Related Party” filed on October 8, 2018 by SK Telink for more information about this transaction.

 

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[Life & Security Holdings]

(1) Spin-off and merger of certain businesses of ADT CAPS

On May 18, 2018, in order to seek a more efficient corporate structure through reorganization, Life & Security Holdings spun off ADT CAPS’ holding company business (i.e., the business of controlling its subsidiaries CAPSTEC and ADT SECURITY through the ownership of shares of these subsidiaries) from ADT CAPS and merged it with and into Life & Security Holdings, with Life & Security Holdings and ADT CAPS surviving these transactions.

[ADT CAPS]

(1) Merger of NSOK

Pursuant to resolutions of the board of directors on October 8, 2018 and the general meeting of shareholders on October 23, 2018, ADT CAPS merged NSOK with and into itself effective as of December 1, 2018 to seek new sources of growth, taking into account the growth potential of the physical security market.

(2) Merger of ADT SECURITY

Pursuant to resolutions of the board of directors on November 14, 2019 and the general meeting of shareholders on November 29, 2019, ADT CAPS completed the merger of ADT SECURITY with and into itself effective as of January 1, 2020 to enhance management efficiency.

[Eleven Street]

(1) Establishment of Eleven Street

On July 31, 2018, the board of directors of SK Planet resolved to spin off its 11st business division (including Scinic, Gifticon and 11Pay) into a newly established company, Eleven Street, effective as of September 1, 2018. In the spin-off, newly issued shares of the spun-off company were allocated in proportion to the equity interest of the shareholders as of the date of such allocation, at a ratio of 0.14344419 newly issued share for 1 share of SK Planet (8,383,931 common shares).

(2) Capital increase of Eleven Street

Pursuant to the resolution of the board of directors on September 7, 2018, Eleven Street issued new shares through a third-party allotment in order to increase its capital, allocating all such new shares to Nile Holdings Co., Ltd. The payment date was September 28, 2018. After the capital increase, SK Telecom holds a 80.26% interest in Eleven Street. See “Report on Decision on Capital Increase of Eleven Street Co., Ltd.” filed by the Company on September 7, 2018 for more information.

(3) Acquisition of shares of Hello Nature Co., Ltd. (“Hello Nature”)

On October 10, 2018, Eleven Street acquired 281,908 shares of Hello Nature, a fresh food delivery service provider, from SK Planet for Won 29.9 billion. As a result of this acquisition, Eleven Street owns a 49.90% interest in Hello Nature.

(4) Acquisition of shares of KOREACENTER Co., Ltd. (“KOREACENTER”)

Pursuant to the resolution of the board of directors on December 26, 2018, Eleven Street acquired 578,521 shares owned by the shareholders of KOREACENTER (Gi Rok Kim and three other individuals) and 578,521 newly issued shares of KOREACENTER, for a total consideration of Won 27.5 billion, in order to form a strategic alliance and promote its commerce services and global business.

(5) Share repurchase

Pursuant to the resolution at its general shareholders’ meeting held on March 26, 2019 approving a share repurchase and the resolution of its board of directors held on April 26, 2019 approving the terms of such repurchase, Eleven Street repurchased 158,429 units of its own shares from SK Planet for Won 42.5 billion and 203 units of its own shares from certain other shareholders (Young-hoon Jeon and four others) for Won 50 million, effective as of August 30, 2019, in order to enhance the value of its shares. As a result of this repurchase, Eleven Street owns 1.55% of its total shares issued as treasury shares.

 

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[SK Infosec]

(1) Merger of Bizen Co., Ltd. (“Bizen”)

Pursuant to a resolution of its board of directors on November 28, 2014, SK Infosec decided to merge Bizen with and into itself, with SK Infosec as the surviving entity, effective as of January 20, 2015, in order to strengthen its competitiveness through the creation of business synergies. The merger was completed based on a merger ratio of 1:0.0797984.

(2) Comprehensive exchange of shares

On October 25, 2018, the board of directors of SK Infosec resolved to enter into a share exchange agreement with SK Telecom pursuant to which the shareholders of record of SK Infosec would be allotted 0.00997678 treasury share of SK Telecom in exchange for one common share of SK Infosec on December 27, 2018, after which SK Infosec would become a wholly-owned subsidiary of SK Telecom. The share exchange agreement was executed on November 26, 2018 and the comprehensive share exchange was completed on December 27, 2018.

[SK Planet]

Effective as of March 1, 2016, SK Planet spun off its platform business and T Store business in order to enhance the competitiveness of each business for future growth.

Effective as of April 5, 2016, SK Planet spun off its location-based services business and mobile phone verification services business and merged them into the Company in order to further concentrate its resources on its commerce business.

On May 29, 2017, the board of directors of SK Planet resolved to transfer the operations and assets related to its BENEPIA business for Won 7.5 billion to SK M&Service as of July 1, 2017.

On July 17, 2017, the board of directors of SK Planet resolved to (1) spin-off SK Planet’s advertising agency business as a newly established company, SM Contents & Communications, in order to strengthen the competitiveness of the business for future growth, which spin-off was effective as of October 1, 2017 and (2) sell 100% of its shares of SM Contents & Communications to SM Culture & Contents Co., Ltd. to further concentrate business capabilities and efficiently allocate management resources. The closing date of the sale transaction was October 24, 2017.

On June 19, 2018, the board of directors of SK Planet resolved to spin off its 11st business (including Scinic, Gifticon and 11Pay) into a newly established company, effective as of September 1, 2018, in order to enhance the level of specialization and competitiveness of its businesses by strengthening their core competencies and obtain further growth potential of the businesses. See the “Report on Decision on Spin-off of SK Planet’s 11st Business” filed on June 19, 2018 for more information.

On June 19, 2018, the board of directors of SK Planet resolved to merge SK TechX with and into SK Planet, effective as of September 1, 2018, with a merger ratio between SK Planet and SK TechX of 1:3.0504171, in order to enhance management efficiency and create synergies. See the “Report on Decision on Merger of SK TechX into SK Planet” filed on June 19, 2018 for more information.

SK Planet decided to reduce the par value of its shares from Won 500 to Won 150 to improve its financial structure through coverage of losses. The capital reduction is effective as of April 27, 2020.

 

16

[SK M&Service]

(1) Acquisition of SK Planet’s BENEPIA business

Pursuant to the resolutions of its board of directors and its extraordinary shareholders meeting held on May 29, 2017, SK M&Service decided to acquire SK Planet’s BENEPIA business (including agency service for the Flexible Benefit Plan and related tangible and intangible assets, goodwill, systems, etc.) for Won 7.5 billion on July 1, 2017.

[Dreamus Company]

(1) Merger with Iriver CS Co., Ltd. (“Iriver CS”)

Pursuant to the resolution of its board of directors on November 18, 2014, Dreamus Company merged Iriver CS, a subsidiary of the Company, with and into itself on January 31, 2015, with the purpose of enhancing competitiveness through management rationalization and maximization of synergy. The merger was completed based on a merger ratio of 1:0 with no capital increase. The merger and merger registration were completed on January 31, 2015 and February 2, 2015, respectively. Since this merger qualified as a small-scale merger, the approval of the merger by a resolution of the board of directors substituted for the approval by a general meeting of shareholders.

(2) Acquisition of shares of S.M. Life Design Company Japan Inc.

Pursuant to the resolution of its board of directors on July 17, 2017, Dreamus Company approved a contract to acquire a total of 1,000,000 shares of S.M. Life Design Company Japan Inc. (a 100% equity interest) from S.M. Entertainment Japan Co., Ltd. with the purposes of entering foreign markets and maximizing business synergy. Dreamus Company acquired control of S.M. Life Design Company Japan Inc. upon its completion of payment for the shares on September 1, 2017.

(3) Merger of S.M. Mobile Communications JAPAN Inc.

Pursuant to the resolution of its board of directors on July 17, 2017, Dreamus Company decided to merge with S.M. Mobile Communications JAPAN Inc., a contents and information distribution company, with the purpose of reinforcing its contents based device business and enhancing managerial efficiency. As of October 1, 2017, Dreamus Company merged S.M. Mobile Communications JAPAN Inc. into it with a merger ratio of 1:1.6041745, based on which Dreamus Company issued 4,170,852 new common shares.

(4) Acquisition of important assets (Supply and distribution rights for music and digital contents)

On February 28, 2018, Dreamus Company entered into an agreement with S.M. Entertainment Co., Ltd. to acquire supply and distribution rights for music and digital contents of S.M. Entertainment Co., Ltd., JYP Entertainment Corporation and Big Hit Entertainment. Through this arrangement, the Company plans to increase sales by entering the music and sound recording industries and to create synergies through strategic alliances.

(5) Merger between subsidiaries

In order to achieve management efficiency and maximize organizational operation synergies, groovers Japan Co., Ltd. and SM Mobile Communications Japan Inc., each of which was a Japanese subsidiary of Dreamus Company, completed their merger with groovers Japan Co., Ltd. as the surviving entity, effective as of July 1, 2018.

(6) Investment in groovers Inc. (“Groovers”)

On July 26, 2018, the board of directors of Dreamus Company resolved to make an equity investment of Won 11,000 million (2,200,000 common shares) in Groovers for the purposes of providing operating funds to improve its financial structure and pursue new businesses. Payment was completed on July 27, 2018, and the Company’s ownership interest after such equity investment is 100%.

 

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(7) Transfer of Music Mate business between Groovers and SK TechX

On August 31, 2018, pursuant to the resolutions of its board of directors and the extraordinary meeting of shareholders, each of which was held on June 28, 2018, Groovers acquired all properties, assets and rights related to the Music Mate streaming service from SK TechX for Won 3,570 million.

(8) Merger of Groovers

Pursuant to the resolution of its board of directors on December 26, 2018, Dreamus Company merged Groovers, a provider of music, contents and other services, with and into itself on March 1, 2019, in order to seek synergies by integrating management resources and enhance management efficiency. The merger was completed based on a merger ratio of 1:0 with no capital increase. The merger and merger registration were completed on March 1, 2019 and March 5, 2019, respectively. Since this merger qualified as a small-scale merger, the approval of the merger by a resolution of the board of directors substituted for the approval by a general meeting of shareholders.

(9) Disposal of shares of Iriver Inc.

Pursuant to the resolution of its board of directors on July 18, 2019, Dreamus Company disposed of all of its shares in Iriver Inc., effective as of September 1, 2019, with the goal of achieving sustainable growth of its device business by improving its financial structure and profitability and maintaining its business expertise and continuity of operations.

(10) Merger between subsidiaries

In order to achieve management efficiency and maximize organizational operation synergies, Life Design Company Inc. and groovers Japan Co., Ltd., each of which is a Japanese subsidiary of Dreamus Company, completed their merger with Life Design Company Inc. as the surviving entity, effective as of December 15, 2019.

[Incross]

(1) Spin-off of Infra Communications Co., Ltd. (“Infra Communications”)

Effective as of August 1, 2017, Incross spun off its business related to the operation agency service of the integrated mobile application marketplace “Onestore” into a newly established company, Infra Communications, in order to strengthen the expertise and enhance management efficiency of each of its businesses, to respond effectively to the external environment by re-investing the value generated from each business into such business, and to grow and develop such business through strategic and efficient allocation of management resources.

(2) Transfer of mobile advertising network business

Effective as of April 1, 2017, Incross acquired SK Planet’s mobile advertising network business, “Syrup Ad.”

(3) Transfer of media representative business

Effective as of March 17, 2020, Incross acquired SK Stoa’s advertisement media agency and advertising agency businesses.

3.    Total Number of Shares

 

A.	Total Number of Shares

 

(As of March 31, 2020)						(Unit: in shares)
Classification		Share type												Remarks
		Common shares				Preferred shares				Total
I. Total number of authorized shares			220,000,000				—				220,000,000				—
II. Total number of shares issued to date			89,278,946				—				89,278,946				—
III. Total number of shares retired to date			8,533,235				—				8,533,235				—
a. reduction of capital			—				—				—				—
b. retirement with profit			8,533,235				—				8,533,235				—
c. redemption of redeemable shares			—				—				—				—
d. others			—				—				—				—
IV. Total number of shares (II-III)			80,745,711				—				80,745,711				—
V. Number of treasury shares			7,609,263				—				7,609,263				—
VI. Number of shares outstanding (IV-V)			73,136,448				—				73,136,448				—

 

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B.	Treasury Shares

There were no acquisitions and dispositions of treasury shares during the reporting period.

4.    Status of Voting Rights

 

(As of March 31, 2020)						(Unit: in shares)

Classification				Number of shares				Remarks
Total shares (A)		Common share			80,745,711				—
		Preferred share			—				—
Number of shares without voting rights (B)		Common share			7,609,263				Treasury shares
		Preferred share			—				—
Shares without voting rights pursuant to the Company’s articles of incorporation (the “Articles of Incorporation”) (C)		Common share			—				—
		Preferred share			—				—
Shares with restricted voting rights pursuant to Korean law (D)		Common share			—				—
		Preferred share			—				—
Shares with reestablished voting rights (E)		Common share			—				—
		Preferred share			—				—
The number of shares with exercisable voting right s (F = A - B - C - D + E)		Common share			73,136,448				—
		Preferred share			—				—

5.    Dividends and Others

 

A.

Dividends

 

(1)

Distribution of cash dividends was approved during the 33rd General Meeting of Shareholders held on March 24, 2017.

 

•

Distribution of cash dividends per share of Won 9,000 (exclusive of an interim dividend of Won 1,000) was approved.

 

(2)

Distribution of interim dividends of Won 1,000 was approved during the 404th Board of Directors’ Meeting on July 28, 2017.

 

(3)

Distribution of cash dividends was approved during the 34th General Meeting of Shareholders held on March 21, 2018.

 

•

Distribution of cash dividends per share of Won 9,000 (exclusive of an interim dividend of Won 1,000) was approved.

 

(4)

Distribution of interim dividends of Won 1,000 was approved during the 416th Board of Directors’ Meeting on July 26, 2018.

 

(5)

Distribution of cash dividends was approved during the 35th General Meeting of Shareholders held on March 26, 2019.

 

•

Distribution of cash dividends per share of Won 9,000 (exclusive of an interim dividend of Won 1,000) was approved.

 

19

(6)

Distribution of interim dividends of Won 1,000 was approved during the 426th Board of Directors’ Meeting on July 25, 2019.

 

(7)

Distribution of cash dividends was approved during the 36th General Meeting of Shareholders held on March 26, 2020.

 

•

Distribution of cash dividends per share of Won 9,000 (exclusive of an interim dividend of Won 1,000) was approved.

 

B.	Dividends for the Last Three Fiscal Years

 

		(Unit: in millions of Won, except per share data and percentages)
Classification						As of and for the three months ended March 31, 2020				As of and for the year ended December 31, 2019				As of and for the year ended December 31, 2018
Par value per share (Won)							500				500				500
(Consolidated) Net income							309,440				889,907				3,127,887
Net income per share (Won)							4,181				12,144				44,066
Total cash dividend							—				730,098				717,438
Total stock dividends							—				—				—
(Consolidated) Percentage of cash dividend to available income (%)							—				82.0				22.9
Cash dividend yield ratio (%)			Common shares				—				3.7				3.6
			Preferred shares				—				—				—
Stock dividend yield ratio (%)			Common shares				—				—				—
			Preferred shares				—				—				—
Cash dividend per share (Won)			Common shares				—				10,000				10,000
			Preferred shares				—				—				—
Stock dividend per share (share)			Common shares				—				—				—
			Preferred shares				—				—				—

 

*

The total amount of cash dividends was calculated by adding the total amount of cash dividends resolved at the general meeting of shareholders for the relevant fiscal year and any quarterly cash dividends paid during such fiscal year (including the interim dividends of Won 1,000 per share) in accordance with applicable disclosure requirements.

 

20

II.

BUSINESS

1.    Business Overview

Each company in the consolidated entity is a separate legal entity providing independent services and products. The business is primarily separated into (1) the wireless business consisting of cellular voice, wireless data and wireless Internet services, (2) the fixed-line business consisting of fixed-line telephone, high speed Internet, data and network lease services, among others, (3) commerce business, (4) security business and (5) other businesses consisting of platform services and Internet portal services, among others.

Set forth below is a summary business description of material consolidated subsidiaries.

 

Classification		Company name		Description of business
Wireless		SK Telecom Co., Ltd.		Wireless voice and data telecommunications services via digital wireless networks
		PS&Marketing Co., Ltd.		Sale of fixed-line and wireless telecommunications products through wholesale, retail and online distribution channels
		SK O&S Co., Ltd.		Maintenance of switching stations
		Service Ace Co., Ltd		Management and operation of customer centers
Fixed-line		SK Broadband Co., Ltd.		High-speed Internet, TV, telephone, commercial data and other fixed-line services and management of the transmission system for online digital contents Various media-related services, such as channel management, including video-on-demand (“VOD”), and mobile IPTV services
		SK Telink Co., Ltd.		International wireless direct-dial “00700” services, voice services using Internet protocol and Mobile Virtual Network Operator (“MVNO”) business
		Home & Service Co., Ltd.		System maintenance of high-speed Internet, IPTV and fixed-line services
Security		Life & Security Holdings Co., Ltd.		Holding company
		ADT CAPS Co., Ltd.		Unmanned machine-based security and manned security services
		SK Infosec Co., Ltd.		Comprehensive information protection services and integrated computer system consulting and implementation services
Commerce		Eleven Street Co., Ltd.		E-commerce and Internet-related businesses
Other business		SK Planet Co., Ltd.		Information telecommunications business and development and supply of software
		Onestore Co., Ltd.		Operation of mobile application store
		Dreamus Company (formerly known as Iriver Ltd.)		Online music service and distribution of records and digital content
		SK M&Service Co., Ltd.		System software development, distribution and technical support services and other online information services
		K-net Culture and Contents Venture Fund		Start-up investment support
		Atlas Investment		Investments
		Incross Co., Ltd.		Advertising

 

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[Wireless Business]

 

A.	Industry Characteristics

The telecommunications services market can be categorized into telecommunications services (such as fixed-line, wireless, leased line and value-added services) and broadcasting and telecommunications convergence services. Pursuant to the Telecommunications Business Act, the telecommunications services market can be further classified into basic telecommunications (fixed-line and wireless telecommunications), special category telecommunications (resale of telecommunications equipment, facilities and services) and value-added telecommunications (Internet connection and management, media contents and others). The size of the domestic telecommunications services market is determined based on various factors specific to Korea, including size of population that uses telecommunication services and telecommunications expenditures per capita. While it is possible for Korean telecommunication service providers to provide services abroad through acquisitions or otherwise, foreign telecommunication services markets have their own characteristics depending, among others, on the regulatory environment and demand for telecommunication services.

The Korean mobile communication market is considered to have reached its maturation stage with more than a 100% penetration rate. However, the Korean mobile communications market continues to improve in the quality of services with the help of advances in network-related technology and the development of highly advanced smartphones which enable the provision of convergence services for multimedia contents, mobile commerce, telematics, new media and other related services. In addition, through further advancements in LTE networks and the commercialization of 5G networks in 2019, B2B businesses, such as the corporate “connected workforce” business which can directly contribute to an enhancement in productivity, are expected to grow rapidly.

 

B.	Growth Potential

 

												(Unit: in 1,000 persons)
Classification				As of March 31,				As of December 31,
				2020				2019				2018
Number of subscribers		SK Telecom			28,748				28,648				27,382
		Others (KT, LGU+)			31,898				31,539				29,989
		MVNO			7,564				7,750				7,989
		Total			68,210				67,937				65,360

 

*	Source: Wireless subscriber data from the MSIT as of March 31, 2020.

 

C.	Domestic and Overseas Market Conditions

The Korean mobile communication market includes the entire population of Korea with mobile communication service needs, and almost every Korean is considered a potential user. Sales revenue related to data services has been growing due to the increasing popularity of smartphones and high-speed wireless networks. There is also a growing importance to the B2B segment, which creates added value by selling and developing various solutions. The telecommunications industry is a regulated industry requiring license and approval from the MSIT.

In the wireless business, industry players compete on the basis of the following three main competitive elements:

(i)    brand competitiveness, which refers to the overall sense of recognition and loyalty experienced by customers with respect to services and values provided by a company, including the images created by a company’s comprehensive activities and communications on top of the actual services rendered;

(ii)    product and service competitiveness, which refers to the fundamental criteria for wireless telecommunications services, including voice quality, service coverage, broad ranges of rate plans, diversified mobile Internet services, price and quality of devices and customer service quality, as well as the ability to develop new services that meet customer needs in a market environment defined by convergence; and

 

22

(iii)    sales competitiveness, which refers to novel and diversified marketing methods and the strength of the distribution network.

Set forth below is the historical market share of the Company (excluding MVNO subscribers).

 

		(Unit: in percentages)
Classification		As of March 31,				As of December 31,
		2020				2019				2018
Mobile communication services			47.4				47.6				47.7

 

*	Source: Wireless subscriber data from the MSIT as of March 31, 2020.

 

D.	Business Overview and Competitive Strengths

The Company is seeking to transform itself from a telecommunications service provider into a comprehensive ICT service provider. It has continued to innovate the scope of its services and achieved strong growth in subscribers amid fierce competition and rate cuts.

As a result of positive customer responses to a series of customer value innovation programs such as no-contract plans, safe roaming and the T Plan, as well as its position as the top player in the 5G services market in terms of number of subscribers, the Company secured approximately 2.65 million 5G subscribers as of March 31, 2020. The churn rate remained relatively stable at a record low of 0.9% (excluding MVNO subscribers). In the first quarter of 2020, the Company recorded revenue of Won 4,450.4 billion and an operating profit of Won 302.0 billion on a consolidated basis, and revenue of Won 2,922.8 billion and an operating profit of Won 257.9 billion on a separate basis.

In the telecommunications technology domain, the Company commenced providing LTE services of up to 1 Gbps by utilizing five-band carrier aggregation technology and 4T4R technology during the first quarter of 2018. By launching various high quality services utilizing the LTE-A and wideband LTE networks such as group video conference call services and full high definition mobile IPTV streaming services, the Company has innovated its customers’ data usage experience. In June 2018, the Company secured frequency bandwidths that are optimal for the commercialization of 5G services at a reasonable bid price. In the fourth quarter of 2018, the Company began to build its 5G networks, focusing on Seoul and other metropolitan areas. The Company began its first 5G transmission in December 2018 and is focusing on establishing 5G networks with enhanced stability and security through the application of quantum cryptography communication and AI networks.

In April 2019, the Company launched the world’s first 5G subscription services. The Company had 2.08 million 5G subscribers as of December 31, 2019, and the number of 5G subscribers is expected to continue to grow. The Company believes that 5G services would have the greatest impact on customer experiences in media, augmented reality (“AR”) / virtual reality (“VR”) and games, which are the areas that the Company believes would draw the highest level of interest from its customers. The Company is launching services related to these areas, such as the 5GX Boost Park. The Company plans to lead the 5G era by providing differentiated content in various areas including sports and entertainment.

SK Telink, a consolidated subsidiary of the Company, expanded its operations to the MVNO business based on its technical expertise and know-how obtained in its international telecommunications business and launched its MVNO service, ‘SK 7Mobile,’ which is offered at reasonable rates and provides excellent quality. SK Telink is increasing its efforts to develop low-cost distribution channels and create niche markets through targeted marketing towards customers including foreign workers, middle-aged adults and students. An MVNO leases the networks of an MNO and provides wireless telecommunication services under its own brand and fee structure, without owning telecommunication networks or frequencies.

SK O&S, a subsidiary of the Company responsible for the operation of the Company’s base stations and related transmission and power facilities, offers quality fixed-line and wireless network services to customers, including mobile office products to business customers. Network quality is a core competitive factor for not only the traditional consumer market but also for the expanding B2B market, and its importance will only increase in the 5G network era.

PS&Marketing, a subsidiary of the Company, provides a sales platform for products of the Company and SK Broadband including fixed-line and wireless telecommunication products that address customers’ needs for various convergence products. PS&Marketing provides differentiated service to clients through the establishment of new sales channels and product development.

 

23

[Fixed-line Business]

 

A.	Industry Characteristics

The telecommunications services market can be categorized into telecommunications services (such as fixed-line, wireless, leased line and value-added services) and broadcasting and telecommunications convergence services. Pursuant to the Telecommunications Business Act, the telecommunications services market can be further classified into basic telecommunications (fixed-line and wireless telecommunications), special category telecommunications (resale of telecommunications equipment, facilities and services) and value-added telecommunications (Internet connection and management, media contents and others).

The fixed-line telecommunications industry is a technology-intensive industry that evolves rapidly and continuously through the development of communications technology and equipment, which requires proactive responses in meeting the needs of subscribers by developing new services and penetrating the market. Fixed-line telecommunications services have become universal and essential means of communication and act as the foundation for integration and convergence with various other services. The essential nature of such services provides stable demand, resulting in low sensitivity to economic conditions.

The Korean fixed-line services industry is marked by a high level of market concentration, as the government is highly selective in granting telecommunications business licenses. The competitive landscape of the fixed-line and wireless services markets is dominated by its three leading operators, the Company (including SK Broadband), KT and LG U+. Growing competition within the industry has promoted rapid technological evolution, including the convergence of fixed-line and wireless services, as well as broadcasting and telecommunications.

The high-speed Internet segment has attracted new subscribers in specialized markets such as one-person households and SOHO (Small Office Home Office), and the number of subscribers to premium Giga-Internet services, which have evolved beyond the traditional 100Mb optical LAN services, is increasing rapidly as a result of expansions of WiFi-enabled home mobile networks and high-definition and high-capacity media services. In the case of IPTV services, the conversion rate to digital television in the overall paid broadcasting market has been increasing, and the proportion of IPTV subscribers among high-speed Internet users has been expanding. Although growth in the number of new subscribers in the segment has slowed, the IPTV market is expanding rapidly around new sources of customer demand, such as residential subscribers who are installing multiple set-top boxes, as well as hospitals, hotels and lodging facilities. In addition, the consumption of paid contents has become a mainstay viewing pattern as a result of their convenience and the diversification of contents, and the media platform business also continues to expand, including through the growth of VOD advertisements. In order to satisfy the diversifying needs of customers and the trend of combining or fusing services, industry players are providing differentiated contents and incorporating AI and big data technologies, resulting in increased competition in the industry. Such competition will present new growth opportunities in the home platform area in connection with the fourth industrial revolution in the future. For business customers, the Company is introducing new technologies and strengthening its competitiveness to secure a stable source of revenue, while expanding its efforts to secure competitiveness in new growth areas such as platform and solution businesses.

 

B.	Growth Potential

 

				(Unit: in 1,000 persons)
				As of March 31,				As of December 31,
Classification				2020				2019				2018
Fixed-line Subscribers		High-speed Internet			21,998				21,906				21,286
		Fixed-line telephone			13,401				13,600				14,334
		IPTV (real-time)			16,833				16,440				15,054

 

*	Source: MSIT website.

*	The number of IPTV subscribers is based on the relevant report released by the MSIT on December 12, 2019.

 

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C.	Cyclical Nature and Seasonality

High-speed Internet, fixed-line telephone and IPTV services are mature markets that are comparatively less sensitive to cyclical economic changes as such services have become more of a necessity and the market has matured. The telecommunications services market overall is not expected to be particularly affected by economic downturns due to the low income elasticity of demand for telecommunication services.

 

D.	Domestic and Overseas Market Conditions

Set forth below is the historical market share of the Company.

 

										(Unit: in percentages)
Classification		As of March 31,				As of December 31,
		2020				2019				2018
High-speed Internet (including resales)			25.7				25.6				25.4
Fixed-line telephone (including Voice over Internet Protocol (“VoIP”)			16.8				16.8				16.8
IPTV			30.3				30.3				30.3

 

*	Source: MSIT website.

*	With respect to Internet telephone, the market share was calculated based on market shares among the Company, KT and LG U+ and is based on the number of IP phone subscribers.

*	The market share of IPTV subscribers is based on the relevant report released by the MSIT on December 12, 2019.

In each of its principal business areas, SK Broadband principally competes on the basis of price, service quality and speed. In the IPTV business, the ability to offer complex services and differentiated contents are becoming increasingly important. General telecommunications businesses operate in a licensed industry with a high barrier of entry, which is dominated by SK Broadband, KT and LG U+.

 

E.	Business Overview and Competitive Strengths

In the first quarter of 2020, SK Broadband recorded Won 823.5 billion in revenue, Won 37.4 billion in operating profit and Won 45.6 billion in profit on a consolidated basis. Despite the effects of discontinued operations, SK Broadband achieved revenue growth compared to the first quarter of 2019 due to an increase in the number of IPTV subscribers and increase in sales from paid content and its corporate business.

In the case of high-speed Internet, revenue slightly increased due to an increase in the proportion of subscribers of premium services, such as Giga Internet. The IPTV service business continued its solid growth, with sales from paid content achieving a record high on a quarterly basis. Despite concerns about an absence of popular contents due to a decrease in theatrical releases of movies, SK Broadband has strengthened its position as a media platform and maintained its revenue growth on a separate basis through active and effective content offerings and marketing efforts based on customers’ needs. In the case of its corporate business, SK Broadband achieved revenue growth compared to both the fourth quarter of 2019 and the first quarter of 2019 as a result of securing new large-scale exclusive fixed-line projects and increased internet data center traffic.

[Security Business]

 

A.	Industry Characteristics

The security systems service business provides security services to governments, companies and individuals with the purpose of protecting tangible and intangible assets and human resources. Depending on the risk prevention method used, the security business can be classified into machine-based security, security system integration (“SI”) and manned security. Machine-based security operates by receiving information that is detected and transmitted by various sensors and cameras installed at the target facilities through control facility equipment and taking prompt and appropriate action, such as dispatching an agent or contacting the police or the fire department, if an abnormality is detected. Security SI is a service that integrates installation, operation, maintenance and repair of various equipment and systems by analyzing the appropriate security system for customer facilities, such as buildings, factories and schools. Manned security services deploy security personnel to areas subject to security, who perform on-site security services such as patrols and access control of buildings and facilities. The Company’s primary business in the security industry is its unmanned security service, and its business areas consist of the following:

 

Classification		Product
Machine-based security		CAPS service (unmanned security service), access control, view guard (CCTV), attendance management, drinking water management
Security SI and maintenance and repair		Access control (entry and parking), CCTV (recording, camera, monitor, network equipment), other security systems
Integrated security services (machine-based security + manned security)		Machine-based security services, manned security services (security, cleaning, concierge, etc.)

 

25

B.	Growth Potential

The size of the physical security industry in terms of revenue is as follows:

 

(Unit: in millions of Won except percentages)
		2018				2019				Change (%)
Dispatch security services			1,726,210				1,727,972				0.1	%
Video security services			401,777				415,647				3.5	%
Other security services			485,004				536,208				10.6	%
Total			2,612,991				2,679,827				2.6	%

 

*	Source: Korea Information Industry Association (2019 Korean Information Security Services Industry Survey published in December 2019). 2019 figures are estimates.

 

C.	Cyclical Nature and Seasonality

The security systems business seeks to satisfy the basic need for safety and is less sensitive to economic fluctuations compared to other industries. Although the slowdown in the Korean economy and competition based on lower-cost alternatives has had a negative impact on industry growth, sustained growth is nevertheless expected due to the recent expansion of the industry into converged security markets with the integration of ICT.

 

D.	Domestic and Overseas Market Conditions

The security industry is experiencing a rapid increase in demand for CCTV, access control and other security systems due to threats including crime, natural disasters and calamities and terrorism. With increased consumer interest in safety, demand for security system services is expected to continue to grow. To date, the Korean security market is characterized by an oligopoly dominated by three leading companies due to the high barriers to entry as a result of high initial investment costs of building large-scale network systems and the effects of brand loyalty. The traditional security industry, characterized by price competition aimed at increasing market share, is expanding into a converged security market with the integration of ICT. In addition, the global converged security market integrating ICT has recently been experiencing rapid growth and increased competition due to the entry of global information technology companies. As a result, the global AI security industry, which had a market size of US$3.9 billion in 2018, is expected to grow tenfold by 2025.

 

E.	Business Overview and Competitive Strengths

For the three months ended March 31, 2020, ADT CAPS recorded Won 191.5 billion in revenue and Won 26.4 billion in operating profit, and it has secured approximately 590,000 subscribers as of March 31, 2020, including subscribers to newly launched businesses.

Due to the saturation of the unmanned security market, the net growth rate in the number of ADT CAPS’ unmanned security contracts decreased in 2019 compared to the previous year. However, ADT CAPS was able to record approximately Won 740 billion in revenue in 2019, exceeding expectations, due to increases in the number of new subscribers acquired through the SK distribution network and sales in newly-launched businesses, such as CAPS Home and parking services.

 

26

Although the unmanned security market is expected to remain saturated in 2020, ADT CAPS will pursue efforts to improve its core unmanned security business through the development of products and market approaches that are tailored to the needs of various customers, while steadily improving its new security businesses at the same time.

In particular, through the merger of ADT SECURITY, a provider of security equipment and solutions, with and into itself, ADT CAPS plans to reach customers with a diverse range of products as a convergence security company in 2020.

Unmanned security services range from crime prevention based on cutting-edge sensors and prompt dispatch of security personnel to follow-up services. With increased efforts to reduce false alarms, ADT CAPS continues to reduce dispatch and control costs, thereby improving service quality and ultimately generating new sources of revenue to establish a positive cycle for continuous growth.

Video security services provide objective security through full identification of subjects with the use of high-definition video, made convenient and safe through a diverse lineup of products and remote control services. Access security services provide outsider access control, employee attendance checks and even drinking water management, which are made user-friendly and convenient due to the integration of cutting edge AI-based technology such as fingerprint, facial and mobile recognition. ADT CAPS plans to continue advancing such technology-based services and deliver more convenient and safer security services to customers through innovative technologies.

The SI business provides comprehensive security solutions suitable for the management of large buildings, such as access control and energy, fire safety and parking management services. ADT CAPS is striving to provide customers with the best comprehensive security solution, including more economical and optimized products through the development of innovative technologies.

[Commerce Business]

 

A.	Industry Characteristics

Electronic commerce, or e-commerce, refers to transactions of goods and services that are processed electronically by information processing systems, such as personal computers, and can be classified into “online order” and “online order brokerage” businesses. The mail order brokerage business refers to the act of intermediating a transaction between a seller and a buyer by an online shopping mall, and the online order business refers to direct sales of goods and services by an online shopping mall. Online shopping malls can be categorized, based on the range of products that they handle, into special malls that handle products limited to specific categories and general malls that handle products across multiple categories. The Korean e-commerce market started to grow in the early 2000s with the spread of the Internet, and it is now going through a second period of growth in the form of mobile commerce as a result of the removal of time and space constraints on shopping following the proliferation of smartphones beginning in 2010, the simplification and improved convenience of payment services, the expansion of fast delivery services following intense competition in such services beginning in 2018, the combination of offline and online shopping experiences (omni-channel and O2O services) and advancements in personalization and recommendation services based on AI. 11st, which is an online order brokerage business, is known as an “open market business” within the e-commerce market. As a result of leading the trend of mobile commerce and pursuing innovative customer experience since the early stages of its business, 11st has grown into a major player in the e-commerce market.

 

B.	Growth Potential

As of December 31, 2019, the size of the Korean e-commerce market was Won 134.6 trillion, accounting for approximately 28% of the total online and offline distribution market and demonstrating rapid growth at an annual average growth rate of over 25% for the past three years. In addition, mobile transactions accounted for 64.4% of the total e-commerce transaction value in 2019, after surpassing 50% for the first time in 2016. Considering the current acceleration in the shift of products traditionally sold offline, such as food products, food delivery services, apparels and household products, to the mobile e-commerce platform, mobile e-commerce is expected to continue its growth in the future.

 

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Year		2019				2018				2017				2016
E-commerce transaction value (trillion Won)			134.6				113.7				94.2				65.6
Annual growth rate			18.3	%			20.8	%			43.6	%			21.5	%

 

*	Source: Statistics Korea, “Online Shopping Trends.”

 

C.	Cyclical Nature and Seasonality

While the commerce industry is inherently affected by fluctuations in the economy to a certain extent, their effect on the e-commerce market has been limited due to its ongoing rapid growth.

 

D.	Domestic and Overseas Market Conditions

The mobile-centered online commerce market is expected to grow steadily due to the further growth potential of the Internet shopping population, the development of online business models by offline commerce operators and the growth of mobile commerce. New business models are expected to emerge and proliferate into new markets as diverse lifestyle services that go beyond commodities are incorporated into the area of commerce.

 

E.	Business Overview and Competitive Strengths

Focusing on the 11st Marketplace, the Company plans to continue expanding the commerce ecosystem of 11st, and ultimately enhance its corporate value by providing diverse and innovative shopping experiences based on technology and strengthening customer benefits using synergies with other ICT businesses of the Company. In particular, the Company’s 11st business recorded an operating profit in 2019 and, as a result, established a foundation for sustainable growth. 11st has become a leader in the Korean e-commerce market through steady growth since its launch in 2008, with the largest number of unique visitors per month (at an average of 17 million unique visitors per month in 2019), by building customer trust and through effective marketing, despite its late entry into the online commerce market that was previously dominated by two players, Gmarket and Auction. 11st has also firmly established itself as a market leader and top player in the Korean mobile commerce market by rapidly responding to the shift of the e-commerce market towards mobile platforms. In addition, the Company has made efforts to gain the market’s confidence and improve customer satisfaction since the launch of 11st, resulting in recognition by certifications from KS-SQI (Service Quality Index) for twelve consecutive years, KCSI (Consumer Satisfaction Index) for eleven consecutive years and CCM (Consumer Centered Management). Based on the large user base of 11st, the Company plans to expand the product offerings of 11st based on expanded partnerships with third parties and upgrade services, thereby continuing to strengthen the unique value of 11st as a commerce portal through improvements in customer’s convenience and continuous innovation.

[Other Businesses]

OK Cashbag, operated by SK Planet, is a point-based loyalty marketing program which has grown to become a global top-tier loyalty marketing program since its inception in 1999. Customers have access to increased benefits through accumulation of loyalty reward points and partner companies use OK Cashbag as a marketing resource. As Korea’s largest loyalty mileage program, OK Cashbag maintains a leading position in the industry. The Company is continuing to develop its service in light of market conditions and customers’ needs to enhance its customers’ perception of point value and is reviewing and pursuing various plans to develop OK Cashbag into a service that goes beyond a mileage program that leverages the key competitiveness of OK Cashbag such as its platform and partnership network.

Syrup is a service that provides information about coupons and events based on time, place and occasion, thereby maximizing economic benefits for consumers, as well as a marketing tool based on consumption behavior data that enables its business partners to achieve smart, low-cost and high-efficiency marketing. In 2019, based on big data accumulated over the years, Syrup expanded its service to the area of mobile finance, which allows users to check their financial assets and provides an integrated process including recommendation for and subscription to customized financial products. The Company plans to continue developing Syrup to provide more practical benefits to its customers in their daily lives.

Incross, a material subsidiary of the Company, primarily focuses on the digital advertising media representative business, which involves establishing media strategies and executing advertising on behalf of advertisers and advertising agencies, and its “Dawin” business, Korea’s first video advertising network platform. In addition, Infra Communications, a subsidiary of Incross, provides operational services for the integrated mobile application market “Onestore.”

 

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FLO, launched in December 2018 by Dreamus Company, a material subsidiary of the Company, is a music streaming service that recommends music and provides a user experience (“UX”) tailored to individual users. Based on AI, FLO recommends music for its users by closely analyzing such user’s music listening history and provides various playlists on a home screen that changes daily by applying an adaptive UX. As of March 31, 2020, the market share of FLO in terms of number of average unique visitors (calculated based on the total mobile monthly active users of FLO, Melon, Genie, NAVER Music, Vibe, Bugs and YouTube Music) was approximately 17.9% (Source: Korean Click). In addition to its online music service, Dreamus Company operates a music records and digital content distribution business, artist merchandise business and device business under the “Astell&Kern” brand.

2.    Updates on Major Products and Services

 

(Unit: in millions of Won and percentages)

Business

Major Companies

Item

Major Trademarks

Consolidated Sales Amount

Ratio

Wireless

SK Telecom Co., Ltd., PS&Marketing Co., Ltd., Service Ace Co., Ltd. SK O&S Co., Ltd.

Mobile communication service, wireless data service, ICT service

T, 5GX, baro, T Plan and others

3,030,194

68

%

Fixed-line

SK Broadband Co., Ltd., SK Telink Co., Ltd.

Fixed-line phone, high speed Internet, data and network lease service

B tv, 00700 international call, 7mobile and others

753,694

17

%

Security

ADT CAPS Co., Ltd.

Manned and unmanned security, information security and others

T&CAPS, B&CAPS and others

275,188

6

%

Commerce

Eleven Street Co., Ltd.

E-commerce

11st, 11Pay, Gifticon and others

187,402

4

%

Other

SK Planet Co., Ltd., Onestore Co., Ltd., SK M&Service Co., Ltd., Incross Co., Ltd.

Information telecommunication, electronic finance, advertising, Internet portal service

OK Cashbag, NATE and others

203,918

5

%

Total

4,450,396

100

%

3.    Price Trends for Major Products

[Wireless Business]

As of March 31, 2020, based on the Company’s standard monthly subscription plan, the basic service fee was Won 12,100 and the usage fee was Won 1.98 per second. Among the 4G-based “T-Plans” launched in 2018, the “Medium Plan” provides 4 GB of data and unlimited voice calls at Won 50,000 per month (including value-added tax). Among the “5GX Plans” launched in 2019, the “Slim Plan” provides 8 GB of data and unlimited voice calls at Won 55,000 per month (including value-added tax). The Company provides a variety of other subscription plans catered to subscriber demand.

[Fixed-line Business]

Price fluctuations in the different services provided by SK Broadband are due to discounts provided for long term contracts, changes in equipment costs and competition between companies.

 

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[Commerce Business]

Eleven Street acts as an intermediary in e-commerce transactions between sellers and buyers on 11st, and charges sellers sales commissions in accordance with the terms of use as consideration for execution of transactions, payment settlement and security measures. Although the amount of sales commissions vary by product category, it is generally set at market standard rates ranging from 10% to 12% of the transaction value. Such sales commission rate structure has largely remained unchanged since the launch of 11st, although the Company occasionally offers temporary promotional reductions for certain periods in order to encourage transactions.

4.     Investment Status

[Wireless Business]

 

A.	Investment in Progress

 

(Unit: in billions of Won)

Business

Classification

Investment period

Subject of investment

Investment effect

Expected investment amount

Amount already invested

Future investment

Network/Common

Upgrade/ New installation

Three months ended March 31, 2020

Network, systems and others

Capacity increase and quality improvement; systems improvement

To be determined*

307

—

Total

To be determined*

307

—

 

*	During an earnings conference call, the Company announced that its capital expenditures for 2020 will decrease as compared to 2019.

 

B.	Future Investment Plan

 

(Unit: in billions of Won)

Business

Expected investment amount

Expected investment for each year

Investment effect

Asset type

Amount

2019

2020

2021

Network/Common

Network, systems and others

To be determined

To be determined*

To be determined

To be determined

Upgrades to the existing services and expanded provision of network services including 5G

Total

To be determined

To be determined*

To be determined

To be determined

 

*	During an earnings conference call, the Company announced that its capital expenditures for 2020 will decrease as compared to 2019.

[Fixed-line Business]

 

A.	Investment in Progress

In 2020, the Company plans to make capital expenditures to expand network coverage, upgrade its media platform and exchange terminals in order to enhance customer value, and does not expect such expenditures to have a material adverse effect on the Company’s financial structure through improvements in investment efficiency.

 

(Unit: in 100 millions of Won)

Business

Classification

Investment period

Subject of investment

Investment effect

Amount already invested

Future investment

High-speed Internet

Upgrade/ New installation

Three months ended March 31, 2020

Backbone and subscriber network/ others

Expand subscriber networks and facilities

211

To be determined

Fixed-line telephone

—

IPTV

101

Corporate Business

Increase leased-line and integrated information system

118

Backbone network

Additional backbone equipment and lines

48

Others

Upgrade IT infrastructure and NW security

112

Total

590

 

30

5.     Revenues

 

				(Unit: in millions of Won)
Business		Sales type		Item				For the three months ended March 31, 2020				For the year ended December 31, 2019				For the year ended December 31, 2018
Wireless		Services		Mobile communication		Export			47,894				141,496				50,959
						Domestic			2,982,300				12,030,919				12,327,938
						Subtotal			3,030,194				12,172,415				12,378,897
Fixed-line		Services		Fixed-line, B2B data, high-speed Internet, IPTV		Export			29,439				96,962				104,592
						Domestic			724,255				3,445,469				2,828,006
						Subtotal			753,694				3,542,431				2,932,598
Security		Services		Personnel and system security, information security and others		Export			—				—				—
						Domestic			275,188				913,301				197,487
						Subtotal			275,188				913,301				197,487
Commerce		Services		E-commerce		Export			451				3,829				5,620
						Domestic			186,951				526,660				612,459
						Subtotal			187,402				530,489				618,079
Other		Services		Display and search ad., contents		Export			11,442				81,844				56,925
						Domestic			192,476				503,222				689,974
						Subtotal			203,918				585,066				746,899
Total						Export			89,225				324,131				218,096
						Domestic			4,361,171				17,419,571				16,655,864
						Total			4,450,396				17,743,702				16,873,960

 

						(Unit: in millions of Won)
For the year ended December 31, 2019		Wireless				Fixed				Security				Commerce				Other				Sub total				Internal transaction				After consolidation
Total sales			3,408,434				1,005,453				289,806				190,334				263,779				5,157,806				(707,410	)			4,450,396
Internal sales			378,240				251,759				14,618				2,932				59,861				707,410				(707,410	)			—
External sales			3,030,194				753,694				275,188				187,402				203,918				4,450,396				—				4,450,396
Depreciation and amortization			698,977				194,123				57,865				8,866				15,566				975,397				—				975,397
Operating profit (loss)			253,772				36,414				25,530				(556	)			(13,124	)			302,036				—				302,036
Finance profit (loss)																															(70,913	)
Gain from subsidiaries, investments in associates and joint ventures																															140,895
Other non-operating profit (loss)																															(2,023	)
Profit before income tax																															369,995

 

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6.    Derivative Transactions

 

A.	Current Swap Contract Applying Cash Flow Risk Hedge Accounting

Currency and interest rate swap contracts under cash flow hedge accounting as of March 31, 2020 are as follows:

 

(Unit: in millions of Won and thousands of USD)
Borrowing date		Hedged item		Hedged risk		Contract type		Financial institution		Duration of contract
Jul. 20, 2007		Foreign currency denominated unsecured bonds		Foreign currency risk		Cross currency swap		Morgan Stanley and four other banks		Jul. 20, 2007 – Jul. 20, 2027
Dec. 16, 2013		Fixed rate foreign currency denominated loan		Foreign currency risk		Cross currency swap		Deutsche Bank		Dec. 16, 2013 – Apr. 29, 2022
Apr. 16, 2018		Fixed rate foreign currency denominated bonds		Foreign currency risk		Cross currency swap		The Export- Import Bank of Korea and three other banks		Apr. 16, 2018 – Apr. 16, 2023
Mar. 4, 2020		Floating rate foreign currency denominated bonds		Foreign currency and interest rate risks		Cross currency interest rate swap		DBS Bank		Mar. 4, 2020 – Jun. 4, 2026
Aug. 13, 2018		Foreign currency denominated unsecured bonds		Foreign currency risk		Cross currency swap		Citibank		Aug. 13, 2018 – Aug. 13, 2023
Dec. 20, 2016		Floating rate Korean Won denominated loan		Interest rate risk		Interest rate swap		Korea Development Bank		Dec. 20, 2016 – Dec. 20, 2021
Dec. 21, 2017		Floating rate Korean Won denominated loan		Interest rate risk		Interest rate swap		Korea Development Bank		Dec. 5, 2017 – Dec. 21, 2022
Dec. 19, 2018		Floating rate Korean Won denominated loan		Interest rate risk		Interest rate swap		Credit Agricole CIB		Mar. 19, 2019 – Dec. 14, 2023

 

B.	Balance Settlement Agreements

In 2017, SK Broadband entered into a lease agreement with GL Gasan Metro Co., Ltd. (“GL Gasan Metro”), which engages in real estate development and leasing, in order to develop an internet data center. In connection with such real estate development, GL Gasan Metro raised funds by issuing subordinated bonds to Aegis Specialized Investment Private Real Estate Investment Trust No. 136, which in turn issued beneficiary certificates to S Bisen Co., Ltd. (“S Bisen”), MSGADI Co., Ltd. (“MSGADI”) and S Gasan Co., Ltd (“S Gasan”). SK Broadband entered into a balance settlement agreement in the amount of Won 70 billion with S Bisen and MSGADI in 2017, as well as a separate balance settlement agreement with S Gasan in the amount of Won 200 billion in 2018, each in connection with such beneficiary certificates. Both agreements expire in November 2022, until which point in time SK Broadband is obligated to guarantee a certain rate of return to the counterparties.

In addition, in 2019, SK Broadband entered into a lease agreement with Hana Alternative Investment Specialized Investment Private Real Estate Investment Trust No. 62 (“Hana REIT”), which engages in real estate development and leasing, in order to develop an internet data center. In connection with such real estate development, Hana REIT raised funds by issuing beneficiary certificates to S Gumi Co., Ltd. and S Ori Co., Ltd. (together, the “S Parties”). SK Broadband entered into a balance settlement agreement in the amount of Won 64 billion with the S Parties in connection with such beneficiary certificates. Such agreement expires in September 2024, until which point in time SK Broadband is obligated to guarantee a certain rate of return to the S Parties.

 

32

C.	Treatment of Derivative Instruments on the Balance Sheet

As of March 31, 2020, fair values of derivative instruments held by the Company are included in the consolidated financial statements as current derivate financial assets, derivative financial assets and derivative financial liabilities, which are part of its current assets, non-current assets and non-current liabilities, respectively, as follows:

 

(Unit: in millions of Won and thousands of USD)
Classification		Hedged item		Fair value
				Cash flow hedge				Trading purposes				Total
Non-current assets:
Cross currency swap		Fixed rate foreign currency denominated bonds (face value of USD 400,000)			84,208				—				84,208
		Fixed rate foreign currency denominated bonds (face value of USD 500,000)			98,638				—				98,638
		Fixed rate foreign currency denominated loan (face value of USD 28,732)			2,720				—				2,720
		Fixed rate foreign currency denominated bonds (face value of USD 300,000)			39,725				—				39,725
Balance settlement agreements:		Others			—				5,989				5,989
Total derivative financial assets													231,280
Non-current liabilities:
Interest rate swap and cross currency interest rate swap		Floating rate foreign currency denominated bonds (face value of USD 300,000)			(10,044	)			—				(10,044	)
		Floating rate Korean Won denominated loan (face value of 21,437)			(160	)			—				(160	)
		Floating rate Korean Won denominated loan (face value of 34,375)			(556	)			—				(556	)
		Floating rate Korean Won denominated loan (face value of 46,875)			(816	)			—				(816	)
Total derivative financial liabilities													(11,576	)

7.    Major Contracts

[SK Telecom]

None.

[SK Broadband]

Due to the nature of the telecommunication service business, SK Broadband has entered into agreements related to the joint usage of telecommunication facilities for interconnection among telecommunication lines conduits and telecommunication service providers. Below are the major contracts of SK Broadband. In addition to the below, SK Broadband has also entered into various real estate rental agreements.

 

Counterparty		Contract Contents		Contract Period		Note
Telecommunication service providers		Interconnection among telecommunication service providers		—		-Automatically renewed for two years at a time unless specific amendments are requested
KEPCO		Provision of electric facilities		From Nov. 2019 to Nov. 2020		-Use of electricity poles (entered on Nov. 7, 2014)   -Unless special reasons arise, the usage period will be automatically renewed annually

 

33

Counterparty		Contract Contents		Contract Period		Note
Busan Transportation Corporation		Use of telecommunication line conduits		From Aug. 2019 to Jul. 2020		-Use of railway telecommunication conduit (Serviced areas to expand)   -Absent any request to amend the agreement, usage period will be automatically renewed annually
Seoul Metro		Use of telecommunication line conduits		From Jan. 2018 to Dec. 2020		-Use of railway telecommunication conduit (Serviced areas to expand)
Seoul Metro		Use of telecommunication line conduits		From May 2016 to Dec. 2020		-Use of railway telecommunication conduit (Serviced areas to expand)   -Usage period was automatically renewed every three years until 2019   -Usage period was renewed for an additional one year until 2020

8.    R&D Investments

Set forth below are the Company’s R&D expenditures.

 

								(Unit: in millions of Won except percentages)
Category				For the three months ended March 31, 2020				For the year ended December 31, 2019				For the year ended December 31, 2018				Remarks
Raw material					134				633				760				—
Labor					47,399				125,248				131,792				—
Depreciation					43,309				161,655				155,093				—
Commissioned service					11,724				65,794				78,323				—
Others					9,368				52,167				47,511				—
Total R&D costs					111,933				405,497				413,480				—
Accounting		Sales and administrative expenses			110,315				391,327				387,675				—
		Development expenses (Intangible assets)			1,618				14,170				25,805				—
R&D cost / sales amount ratio (Total R&D costs / Current sales amount×100)					2.52	%			2.29	%			2.45	%			—

9.    Other information relating to investment decisions

 

A.	Trademark Policies

The Company manages its corporate brand and other product brands in a comprehensive way to protect and increase their value. The Company operates an intranet system called “Comm.ON” in order to implement consistent communication with consumers across various areas including branding, design, marketing and public relations, and systematically manages the development, registration and licensing of brands through such system.

 

34

B.	Business-related Intellectual Property

[SK Telecom]

As of March 31, 2020, the Company held 3,025 Korean-registered patents and 1,149 foreign-registered patents. The Company holds 705 Korean-registered trademarks and owns intellectual property rights to its proprietary graphic design of the alphabet “T” representing its brand. The designed alphabet “T” is registered in all business categories for trademarks (total of 45). The number of registered patents and trademarks is subject to constant change due to the acquisition of new rights, expiration of terms, abandonments and dispositions.

[SK Broadband]

As of March 31, 2020, SK Broadband held 371 Korean-registered patents and 143 foreign-registered patents (including those held jointly with other companies). It also holds 284 Korean-registered trademarks and owns intellectual property rights to its proprietary graphic design of the alphabet “B” representing its brand. The designed alphabet “B” is registered in all business categories for trademarks (total of 45). The number of registered patents and trademarks is subject to continual change due to the acquisition of new rights, expiration of terms, abandonments and dispositions.

[SK Planet]

As of March 31, 2020, SK Planet held 1,558 registered patents, 91 registered design marks, 863 registered trademarks and 4 copyrights (in each case including those held jointly with other companies) in Korea. It also holds various other intellectual property rights in other countries, including 252 U.S.-registered patents, 125 Chinese-registered patents, 79 Japanese-registered patents, 89 E.U.-registered patents (in each case including those held jointly with other companies) and 280 foreign registered trademarks.

[Eleven Street]

As of March 31, 2020, Eleven Street held 89 registered patents, 12 registered design marks, 589 registered trademarks and 5 copyrights (in each case including those held jointly with other companies) in Korea. It also holds various other intellectual property rights in other countries, including 30 U.S.-registered patents (including those held jointly with other companies).

 

C.	Business-related Pollutants and Environmental Protection

[SK Telecom]

The Company does not directly engage in any manufacturing and therefore does not undertake any industrial processes that emit pollutants into the air or industrial processes in which hazardous materials are used.

[SK Broadband]

SK Broadband does not directly engage in any manufacturing processes that emit environmental pollutants, and more than 99% of its greenhouse gas emissions is indirect emissions from its use of external electricity. SK Broadband was selected as a business subject to allocation of emission permits as part of Korea’s greenhouse gas emissions trading scheme that commenced in 2015, and it actively fulfills its obligations and consistently achieves the targets set by the government. In addition, SK Broadband continues to invest in environment-friendly facilities for its data centers and improve the stability and efficiency of its services.

 

35

III.	FINANCIAL INFORMATION

1.     Summary Financial Information (Consolidated and Separate)

 

A.	Summary Financial Information (Consolidated)

Below is the summary consolidated financial information of the Company as of March 31, 2020, December 31, 2019 and December 31, 2018 and for the three months ended March 31, 2020 and 2019 and the years ended December 31, 2019 and 2018. The Company’s unaudited consolidated financial statements as of March 31, 2020 and December 31, 2019 and for the three months ended March 31, 2020 and 2019, which are prepared in accordance with K-IFRS, are attached hereto.

 

(Unit: in millions of Won except number of companies)
		As of March 31, 2020				As of December 31, 2019				As of December 31, 2018
Assets
Current Assets			8,122,901				8,102,294				7,958,839
•   Cash and Cash Equivalents			1,117,766				1,270,824				1,506,699
•   Accounts Receivable – Trade, net			2,116,023				2,230,979				2,008,640
•   Accounts Receivable – Other, net			1,100,526				905,436				937,837
•   Others			3,788,586				3,695,055				3,505,663
Non-Current Assets			36,199,225				36,509,326				34,410,272
•   Long-Term Investment Securities			834,105				857,215				664,726
•   Investments in Associates and Joint Ventures			13,517,586				13,385,264				12,811,771
•   Property and Equipment, net			11,987,720				12,334,280				10,718,354
•   Intangible Assets, net			4,700,396				4,866,092				5,513,510
•   Goodwill			2,949,658				2,949,530				2,938,563
•   Others			2,209,760				2,116,945				1,763,348
Total Assets			44,322,126				44,611,620				42,369,111
Liabilities
Current Liabilities			7,588,697				7,787,722				6,847,557
Non-Current Liabilities			14,183,914				14,000,362				13,172,304
Total Liabilities			21,772,611				21,788,084				20,019,861
Equity
Equity Attributable to Owners of the Parent Company			22,693,226				22,956,829				22,470,822
Share Capital			44,639				44,639				44,639
Capital Surplus (Deficit) and Other Capital Adjustments			1,005,589				1,006,481				655,084
Retained Earnings			21,859,753				22,235,285				22,144,541
Reserves			(216,755	)			(329,576	)			(373,442	)
Non-controlling Interests			(143,711	)			(133,293	)			(121,572	)
Total Equity			22,549,515				22,823,536				22,349,250
Total Liabilities and Equity			44,322,126				44,611,620				42,369,111
Number of Companies Consolidated			47				48				44

 

						(Unit: in millions of Won except per share data)
		For the three months ended March 31, 2020				For the three months ended March 31, 2019				For the year ended December 31, 2019				For the year ended December 31, 2018
Operating Revenue			4,450,396				4,334,906				17,743,702				16,873,960
Operating Profit			302,036				322,572				1,109,980				1,201,760
Profit Before Income Tax			369,995				467,808				1,162,655				3,975,966
Profit for the Period			306,847				373,631				861,942				3,131,988
Profit for the Period Attributable to Owners of the Parent Company			309,440				379,189				889,907				3,127,887
Profit for the Period Attributable to Non-controlling Interests			(2,593	)			(5,558	)			(27,965	)			4,101
Basic and Diluted Earnings Per Share (Won)			4,181				5,225				12,144				44,066

 

36